Category Archives: Customer Relationship

“I love those automated attendants, recorded voice answering machines and the endless opportunities I get to push my own buttons whenever I make a call looking for someone to help me.”

Said no one, ever.

It has been well documented for some time that customer satisfaction is adversely affected whenever a customer has to deal with or must navigate through one of those automated phone answering systems. Normally when they call, they have a question, or need help with an issue. They want to talk to someone. Otherwise they would have just sent a text. Or accessed the company web page and sent an email. But no, they had hit a threshold where this type of technological linking was not good enough. They wanted to ask another human being to help them. And yet despite their need for support and desire for human interaction, they are denied.

The problem is so rampant that there are now commercials by certain companies appearing on network television espousing the point that when you call them, you actually get to speak to “a real human being”. Some companies now feel that it is now a competitive differentiator that they will have a real live human being answer your call and that you actually get to talk to them when you call them. It is interesting how quickly times changed initially to the automated systems, and then just how quickly they are changing back. There can only be one reason for this service technology whiplash.

Money.

Companies originally saw these systems as opportunities to reduce the cost of support by in effect making the customer responsible for some of their own issue or support request. They would need fewer support people if they could make customers work a little bit in the identification of the type of issue they were calling about. Fewer people needed for support equated to reducing the cost of support. This is always thought of as a good idea for the bottom line.

What they learned was that for the most part customers didn’t really like this type of automated system. It may have saved the company money in their support costs, but it made their customers unhappy. And unhappy customers were not as likely to buy more equipment or products from the vendor that made them use an automated attendant system when they needed support. This is normally thought of as a bad thing for both the top and bottom lines.

Companies learned, or actually relearned the old adage:
“Penny wise and Dollar foolish”. (It is actually “Penny wise and Pound Foolish”, but, I live in Texas, USA, so I have taken a foreign exchange liberty here.)

They may have saved a few pennies with the automated systems which enabled them to reduce the number of people required to deliver customer support, but it ended up costing them many dollars in lost sales from their customers who were not particularly impressed or happy with the support that they got.

Now we have companies advertising that they are using people to answer their service calls, just like everyone used to do thirty plus years ago. Go figure.

While it is interesting to discuss the migratory aspects of the types of customer service and support, I think it might be time to discuss a group that may not have fared so well in the evolution of support: The Employee.

It is no secret that companies must spend significant amounts of money, time and effort supporting their own communications and networking needs. Every company has a corporate network. Every employee has a Personal Computer. The employee productivity gains that have been created are enormous and well documented.

It has also put an enormous strain on and demand for corporate Information Technologies (IT) teams for support by these employees. Security and the ability to keep hackers out has almost become an industry unto itself. Requests for networking, applications, upgrades and support continue to grow as the complexity of what is required by the corporate knowledge worker increases. In the age of Virtual Offices (VOs) the demand to deliver these services to locations outside the classic organization structure or office has boomed.

And what is the diametrically opposed force that companies must deal with in this time of burgeoning employee technology demands?

The desire to reduce, or at least limit the growth of Information Technology support costs.

Companies are facing explosive demand for new and innovative Information Technologies applications and services by their own people in order to continue to generate ever better productivity, but are having to temper responding to this demand due to a desire to keep their IT costs in check. There are many innovative ways that companies are dealing with this issue, and unfortunately there are also several ways that may not be considered quite so innovative.

When I was in college, I once had a physics professor who was preparing us for a rather extensive round of midterm exams. He informed us that once the test was passed out that there would be no talking. He also said that if we had any questions we would be encouraged to raise our hands. He noted that by raising our hands above our heads, blood would obey the laws of gravity and flow out of our arms. This would in turn increase blood flow to our brains. This in turn would cause an increase our brain activities in the firing of synapses and neuron transmission, which in turn should enable us to solve the problem on our own.

I am not sure, but I think the gist of his comments were that we were not to ask him questions, because it was a test.

I am concerned that many of the IT leadership of many businesses today seem to ascribe to the same school of thought when it comes to staff support. If you don’t believe me, try and find the internal organizational phone number to call and actually talk to someone real time if you need IT help with you technology based connections. Emails and instant messaging are by far the preferred mode of communication if you need help. And if by some chance you do locate the telephone number for IT support, I think you have guessed it: You get to deal with the corporate IT automated attendant.

It seems that what was once done for you as a valued productivity asset of the company, when it comes to new applications and upgrades, are now being pushed down to you to try and do on your own. The new definition for employee service seems to include unlimited numbers of IT based emails with directions on how to update, upload and upscope the many new, mandatory or desirable IT capabilities.

Sort of a raise your hand and hope for increased blood flow to the brain when it comes to IT support.

I think part of the reason for this internal support shift is that the cost of IT and support is a very identifiable amount. There are direct numbers, budgets and staff associated with it. In budgeting and costing terms, it has become a very identifiable target. There is a defined amount being spent and as such becomes a prime candidate for cost reduction.

The issue that arises is that for every identified and quantified dollar that is saved from the IT budget, there is not a specific quantifiable amount of incremental time or lost productivity that can be identified or captured by the employees, as they are forced to pick up the slack. The measurable IT budget is reduced and a real dollar cost reduction is recognized. But it is far more difficult to measure how much is “spent” when all the additional hours that all the individual employees must now spend completing these IT tasks are totaled up.

An extra hour or two, here and there spent by each employee doing what was once an IT task gets lost in the count. The employee’s work load doesn’t decrease to accommodate this new additional effort. The deadlines aren’t extended because there is now more to do. It’s just another issue to deal with.

Just like happy customers are known to buy more products, happy employees are known to be more productive. However, employee productivity is something of a subjective measurement where IT budgets are very quantitative. This leaves the decision in the realm of reducing a measurable budget, known quantity at the risk of reducing an unmeasurable, unknown employee satisfaction and productivity quantity.

When the cost of cost reductions is reviewed in such a manner, it is best to expect continued pressure on corporate IT budgets for the foreseeable future.

I think it is probably safe to assume that there will be a point where there is a recognition of the value of supporting employee satisfaction and productivity via increased, direct tool and technology support. My guess is that corporations are probably getting close to that tipping point.

When bellwether companies such as Yahoo! and IBM have already decided that there is in fact greater value to the company when employees interact with each other in the office as opposed to the convenience of working via Virtual Offices, it probably isn’t too far a leap to think that they will also recognize that the small, but highly visible investment in the IT resources to support them is also probably money very well spent.

This is a tough topic to tackle without sounding too trite or stale. But I now have children entering the job market and I have been continuing to do some networking with several people who are in a job search mode so it is on my mind. As usual I got to thinking about where to go and how to position for the jobs of the future. With the continual drive for cost reductions and all the talk about bringing certain jobs back on shore (as others continue to go off-shore), is there truly a way to future proof what you do for a living? I don’t know for sure, but as usual I do have a few thoughts on the topic.

It must be acknowledged and accepted that the rules of the game are changing. We must adapt or it probably will not end well. There will be those who will stubbornly hold out the hope for a return to the days when this country could manufacture and build its own products, and people could earn a living doing it. This was an ideal and golden time, but as we have all seen, there may be scattered exceptions, but by and large that economic structure has gone.

I think this was only the start. Almost every role that can be defined within an organization, can be subject to the same risk of off-shoring, out-sourcing, or whatever description you may choose to use for being moved to a cheaper labor oriented area. Production was moved off-shore because the labor was cheaper. The quality may not have been as good initially, but that can be and for the most part has been rectified. We all wanted the cheapest products possible, because they were good for the bottom line.

We have already seen instances where financial and accounting functions are being out-sourced and off-shored in the name of reducing costs. These are largely looked at as internal functions. They are usually associated with the overhead costs and functions, and as we know, everyone wants to reduce overhead. There are many people across the globe who are trained in the financial and accounting disciplines that perform these functions cheaper than they can be performed here.

We have already seen many instances where Research and Development, what was once a cornerstone of our growth engine, have been moved off-shore to lower cost countries. It seems that there are also many places with smart people who can write code and create products, with many of them working for significantly lower costs than here.

We have also seen the relocation and / or reduction of some of the Human Resource functions to other locations. Many of the repetitive steps associated with the simple recruiting and support functions can be and have been moved to lower cost countries. There has also been an explosive growth in the utilization of self-help and web portals as replacements for actual people.

Service and support is also similarly questionable. It is possible that this trend specifically associated with service may be reversing, but it is still highly probable that when you call for help or support on many products, your call is directed to an off-shore, low cost call center somewhere else in the world. People who predominantly talk on the phone as a function of their job, can have a phone to talk on in just about any low-cost country.

So, against this type of cost cutting and low cost country focus, what do we do for a living going forward?

I think for starters focus on one word: Customers.

The majority of business functions and disciplines that are at risk in being moved to low cost countries do not interface with customers.

Yes, I know that call centers and service have moved off shore and they deal with customers. And again, by and large customers don’t like it. It has been surveyed and noted as a major customer dissatisfier when it comes to support from vendors. And if given a choice almost every customer would prefer to deal with someone in their own time zone and their own country when it comes to support.

As I said, companies are recognizing what their customers want and this trend may be slowing, if not reversing as some of these service related positions return on-shore.

One of the inviolate axioms of business to business commerce is that “People buy from People”. It used to be the same for business to consumer commerce, but the internet seems to be changing that for commodity type transactions. I’ll get to that part a little bit later.

Selling will always be a function that requires direct customer interface. It will also invariably require face to face exchanges between the seller and the customer. In short, it cannot be off-shored easily, if at all.

As we continue to evolve to a service oriented economy, and as products continue to become more and more complex as well as more commoditized and interchangeable, having people who have the ability communicate specific value propositions, and more importantly be able to sell those value propositions in the new economy will be at a premium.

On the reverse side of the selling to customers, will be the implementation of the complex products and services that have been sold. It doesn’t matter if it is a good or service that has been sold. This brings us to the operations team. The reality is that most customers will not accept a “Do It Yourself” approach to the implementation of the good or service that they have purchased. They are usually going to want the company that sells it, to also be the one that puts it in.

Again, the direct customer interface from the operations team on the implementation of the customer’s purchase will be a key to that customer’s satisfaction, and potential future purchases. It can’t be off-shored and it can’t be minimized in its importance. The best product in the world can be sold, but if it is not implemented well, the customer will not be satisfied. This will be the case with both product and service implementations. Having good customer interfacing operations teams will also be a non-negotiable requirement for the future.

I have looked at specific individual customer interfacing roles up to this point, but what about broader multiple customer roles, such as Marketing?

For the most part in the past I have considered marketing an overhead function with a two-drink minimum. This is said with just a little tongue in cheek. However, if we note that individual customer interfaces are important then it is not too far a leap to expect that individual markets are important as well. Even though there is much written about the “global” economy, I don’t think that goods and services can be positioned and marketed the same way in Canada as they are in Brazil.

No one in Brazil will know what a Tuque is, and I have met very few in Canada who understand the importance of a good Caipirinha. Expecting one marketing approach to work in both regions will probably not be a good recipe for success. I do not think there will be a good or reasonable substitute for local market knowledge, cultural awareness, presence and positioning.

I suppose that the same could be said about lawyers and the specific legal requirements of each market. However, the less said about lawyers, the happier I find myself to be.

So where does that leave the organizational and business jobs of the future?

I think that it will be those outward facing, and customer interfacing roles that will be the jobs of the future. I don’t believe that customers will stand for the out-sourcing and off-shoring of them. It is the personal relationships and the trust that is built by direct customer interface that is the basis of a successful business relationship. There may come a time where that changes, but that may be in the “next” generation of business.

That means that the internal facing business and organizational roles are at risk as a function the eternal drive for lower costs. Accounting, Finance, HR (some of the functions), Research and Development and Production / Manufacturing, all to one level of success or another can be and have been sent to lower cost countries.

What is also interesting to me is that historically a little more than forty percent of CEOs that are hired come out of the finance discipline. In good times this number percentage goes down as growth is a focus and in tougher times it goes up as the bottom line takes on even greater importance. Many others come from the accounting and engineering functions as well. My point is, as many of these internal accounting, finance and engineering functions get out-sourced, where will the future leaders come from?

If these entry level (and other) types of roles and positions are sent elsewhere, where will the future leaders get their starts. It is in these roles that we learn and gain experience. If the roles aren’t there to provide the experience and jumping off points, are companies also off-shoring the development structures that the future leaders have used to get started?

This could mean that in due time, future leaders would predominantly come from those countries that the jobs were off-shored to.

If you have dealt with customers for any length of time you have probably run into a situation that is similar to this: You have a perfect solution to a customer’s problem. It can involve a product or a service. It can be minimally disruptive or invasive to their organization. It has a good business case and a quick pay-back for the customer. There is only one problem: The customer doesn’t see it your way and wants to do something else that is far less effective, and wants you as the vendor to foot the bill for their solution’s lost efficiency.

And now the argument starts.

The phrase “The customer is always right” was originally coined in 1909 by Harry Gordon Selfridge, the founder of Selfridge’s Department Store in London. It is a mantra that we in business have all had drummed into our collective heads since we left school and started working. So what do we do when we know in our heart of hearts that in this particular instance the customer is most assuredly wrong, or at the very least not as right as they could be?

I think the above quote might be an edited version of Selfridge’s original idea. There is absolutely no proof of the following, but I still feel the original quote probably went along the lines of something like the following:

“Depending on who has last spoken to the customer, and what they personally believe, what time of day it is, what they ate for dinner last night and the recent incidence of sun spot activity, the customer may be misguided, misinformed, misunderstood to the point of being potentially ignorant of all relevant information associated with the topic, but they are always the customer, and therefore that makes them right”.

In case you are wondering, I added the “sun spot” part myself, just for extra impact.

I think you can see why Mr. Selfridge condensed down the original concept into his now famous quote. The original was a bit of a mouth full and probably wasn’t as customer friendly an idea as he was trying to convey. I’m only guessing here as 1909 was a long time ago and Mr. Selfridge is no longer around to confirm or correct my position.

The point still remains however. Since the precept is that the customer is always right, we probably ought to rephrase the question to: What do we do when the customer has not arrived at the correct right answer?

One thing you can be certain of is that there will be no shortage of people trying to tell a customer what to think. Between you, your competitors, the customer’s internal peers and management, family members and pets, just about everyone will be expressing a view as to what the customer’s proper direction should be. Against this type of backdrop, it is easy to see why a direct confrontation or argument with a customer will not be the most beneficial course of action.

The simplest step in this situation is to check and see if that despite the fact that the customer wants something that is different from your most efficient, effective and elegant of solutions, are they correct? As rare as it may seem there are recorded incidences of customers actually knowing what they want and being correct. It does happen more than one might suspect.

If you can prove to your own and your management’s satisfaction that what the customer wants is indeed a wrong solution, then the next step is to determine who the solution is wrong for. Is it wrong for the customer in that it does not adequately solve their problem, or is it wrong for you the vendor in that it for whatever reason it cannot be defined as good business.

Good business is usually defined as a solution that can be provided (as opposed to one that cannot be provided or does not exist), can be provided profitably and within the time-frames desired by the customer. If the vendor cannot provide the solution or cannot provide the customers desired solution profitably, it is probably not good business.

Unfortunately, there are many recorded instances where despite knowing better, vendors have agreed to and accepted business that does not meet the “good business” hurdle as defined above. These not good business decisions are normally defined as “strategic business” opportunities. A good company can normally stand only so many of these types of “strategic” deals.

If the desired solution is in fact the wrong solution for the customer a logical argument can occur. If it can be empirically proven to the customer that the solution does not solve their problem, then a direct approach can be taken. Empirical proof usually involves numbers and financial comparisons, and not so much on the assumptions and estimates. When it comes to assumptions and estimates, unless there is some very good backing data, who is to say that yours are better than anyone else’s, especially the customer’s?

If you can show a customer numbers, and prove that something else might be a better solution, or save them more money, or (more difficultly) provide them increased value, then the pending argument rapidly just becomes a discussion.

If it turns out that the customer desired solution is wrong for the vendor, then the argument gets a little more involved. While much has been written about solution quality and functionality and such things, it seems that in these days of rapid product and solution turnover, price is the primary driving customer decision factor. If there is a vendor profitability issue associated with a customer desired solution, modifying or increasing the solution price is rarely an acceptable approach to resolution.

When I have encountered this situation, and after ascertaining that no amount of logical discussion is going to change the customer’s mind, I have found it best to at least partially change sides in the argument. By that I mean that instead of pitting one solution against another in some sort of winner take all sweepstakes, I have tried to decompose the customer’s preferred solution into its component parts to see which parts may be congruent with my solution, and focus on those as the opportunity to discuss.

Everyone likes to feel that they are right, and by focusing on the points where there is agreement instead of the overall solution where there is not, a vendor can focus on the aspects of the opportunity that can provide them “good business” while accepting that the customer wants a different solution. This approach is essentially the de-scoping of the aspects of the overall solution that cannot be profitably provided. It highlights where there is complete agreement between the customer and the vendor and where there is not. It also clearly, but not in a confrontational manner quantifies what the cost and value of the disagreement is.

I learned some time ago that all mutually healthy dealings between customers and vendors occasionally requires either party to tell the other “no”. Customers can very easily do this by simply selecting another vendor to fulfill their needs. This approach can be a little drastic but it is definitely guaranteed to get a vendor’s attention very quickly. Vendors on the other hand can only afford to act in a similar manner, i.e. firing a customer, if they have the entire market for the desired good or service cornered where they are the only supplier, or they risk such behavior at their own peril.

By breaking down the customer’s desired solution into its component parts it is possible to tell the customer both “yes” and “no” at the same time. A vendor can say yes to what makes sense, and no to what doesn’t.

When there is contention between a customer and a vendor over a solution, look at the subsets of the total solution where there is agreement, instead of the total offered solution where there is not. This approach serves the twin functions of communicating to the customer where the issues are with their desired solution as well keeping focused on the primarily profitable business that is beneficial to the company.

Just be prepared for the phrase “You have to take the bad with the good”, but that will be another discussion. At least at that point you are negotiating.

Customers are interesting things. They are the source of all business’ survival. They are hard to find and easy to lose. Many times they don’t know what they want and are almost always not willing to pay for what they need. They are fickle with their allegiance and occasionally are not entirely forthcoming about their preferences. They are part of and are sometimes caught up in a changing environment that most of the time they may not be prepared for. It would probably be possible for a vendor to solve the customer’s problems, if only those problems would remain unchanged for any sort of measurable time.

But they don’t.

Customer’s problems change. The very act of solving one problem invariably creates, or at the very least reprioritizes another problem.

Please don’t get me wrong. This is the way of business very much in the same way of Darwin’s Theory of natural selection. I’ll use the evolutionary speed race between cheetahs and gazelles here.

Faster gazelles mean that only the fastest cheetahs are selected to survive as they are the only ones that can catch the gazelles. This means that the next generations of cheetahs are based only on the faster bloodlines.

Now, the next generations of faster cheetahs mean that only the fastest gazelles will be selected to survive as the slower ones will fall victim to the cheetahs. This means that the next generations of gazelles will be based only on the faster bloodlines.

Now only the fastest of the faster generation of cheetahs will survive.

And the pendulum continues to swing from one side to the other.

I am going to focus on business services here because I think it best illustrates the changing focus, and the swinging pendulum of customer desires. In the business world of services there are no gazelles and cheetahs, but rather there are prices and service levels. There may be those that may try to interject other variables into the service customer equation, but the reality remains primarily associated with these two variables. The interesting part of this price and service level relationship is that only one of them seems to vary at any given specific time.

In the initial stages of the vendor to customer relationship the primary variable will be price. (There may be times where this relationship may be referred to as a “partnership”. This would be inaccurate. Partnerships of the sort implied here take time to evolve. Particularly when there is an ongoing service based relationship.) When a customer is looking to enter into a business services relationship, they are initially looking for a vendor.

This is due in no small part to how most customers go about entering into a services relationship. They will invariably set a minimum required performance level for the services they want, and then look to the vendor that agrees to provide them the greatest cost reduction from their current spend level at the selected service level. That means they are looking for the vendor that bids / quotes them the lowest price.

Of the two variables previously noted, price and service level, they have fixed the service level and are trying to vary the price to the lowest level possible. If the price for the desired services is low enough (as opposed to the total attracted cost that they are currently paying) they will select the vendor and sign a contract. If it does not return sufficient savings the customer will usually stay with the service arrangement that they currently have and avoid any service provision change event issues.

Once the service contract is signed, the price for those services is now fixed. The customer focus will now shift to the service levels associated with the service. Requests for incremental service or services and faster solutions to issues and problems will become the focus.

It is at this point that a relationship can begin to become a partnership.

Businesses want to help with and solve their customers’ problems. That is the value they bring and why customers buy their services. One of the things to remember is that customers associate value with that which they pay for. That means if you give them something for free one of two things will happen. They will either associate no value with what you have given them (since it was free) or you will have established a new service baseline where what you have given them will be incorporated into what they expect going forward. You will in effect raise the service baseline performance expectation going forward.

And once the new increased service level baselines are set the next generation of discussions (or contracts) will once again be focused on the price of the new service level.

And the customer pendulum will continue to swing, price, service, price, etc.

The point here is that despite their best intentions, vendors need to resist the urge to provide quick and cost free solutions in an effort to engender customer gratitude. There will always be times where quick support decisions will need to be made to support the customer, but it is always in everyone’s best interest to go back and revisit them after the issue has passed. Providing “freebies” provides some credence to the customer perception that once the price is set, they can continue to push for a greater scope of work to be provided.

A partnership has to have more of a connotation of a peer to peer relationship instead of a customer to vendor relationship. That means that there is a give and take instead of just an ask and take oriented relationship. If something is provided, then something should be asked for in return. It does not need to be strictly quid pro quo, but there needs to be some sort of cost or consequence associated with each request and action in a business services relationship.

Contrary to what we might feel, without some sort of cost consequence for their requests, many customers will only more deeply ingrain their vendor type perception of the relationship. The customer asks, the customer gets and it is up to the vendor to figure out how to provide it and continue to survive in the relationship. Businesses need to remember that making a customer happy by giving them things does not create a partnership. It usually just creates an expectation that more can and will be given in the future.

One of the best ways to stop the customer pendulum from swinging and creating a business partnership is to focus on the customer’s business service needs while remembering your own business needs. Being responsive as well as empathic regarding the customer’s issues will go a very long way in this regard. It is also necessary to educate the customer on the supply side issues in the service equation and the requirements that are required for a viable business relationship going forward.

I don’t know that you can ever get a customer to be fully empathic about the issues and costs associated with solving their service problems, but educating them about what it takes to provide them service can probably go a long way toward getting them to acknowledge and accept the bill that should be presented to them after the issues have been solved.

I often travel for business. Maybe that is the reason that I seem to find myself writing about business travel so frequently. I used to think that travel was exciting and exotic. That was right up until the point where I actually started traveling, a lot. For those of you that don’t travel much, trust me, it isn’t that great. I noticed a new commercial on television (since there really aren’t any new shows out right now, I notice the new commercials during the reruns) extolling the virtues of a certain hotel for those that “get” to travel as opposed to those that “have” to travel. Cute approach, but definitely aimed at those that don’t know anything about traveling.

I think very few of us who have done any traveling actually feel like we “get” to travel. I understand that a certain amount of travel is to be expected, and might even be considered mandatory for the proper conduct of business. Even in the virtual world that we now work in, sometimes there is no substitution for being there in person. We can video conference, Instant Message, email or even call on the phone all we want, but it is just not the same as being there.

If we accept that there is a defined amount of travel that should occur, we now need establish some boundaries around it so that we can make sure that we are efficient with the use of our travel. Is too little bad for business? Can you travel too much? Do you get a good return for your travel dollar cost investment?

Remember that travel constitutes the entire amount of time portal to portal, and back that the trip encompasses. The two hour meeting that you attended may have been very productive, but was it worth the entire two business days of work time (including travel) that were invested in it for you to attend? Before we can answer that question I think we need to apply a “weighting” factor. Customer meetings are important. They are always more important than internal business meetings. Time with the customer is precious. The customer has only a limited amount of time available in their day and if they choose to spend any of it with you, it should be treated as precious.

On the other hand, internal business meetings occur all the time. I have discussed in the past that there seems to have been a blurring of the lines between what is a meeting and what is a conference call. This blurring if anything has devalued the time spent in meetings. Now multiple people choose to attend by video or conference circuit. It may be a meeting requiring time, travel and expense, but for several it is just another phone call.

For me travel is not a very efficient use of time. I look on with great admiration and envy at those on the plane that are able to open their PCs and work on their spreadsheets or presentations. I have tried to do it. Occasionally I try again to do it, just to see if something has magically changed and I am now able to work in a cramped, strange setting with 250 strangers sitting close by, with several of whom seemingly in succession needing to go to the bathroom. It is to no avail. For whatever reason I cannot get meaningful work done on an airplane. I have even tried to write articles for publication in this forum while spending twelve hours en route to Brazil, and was unsuccessful at it.

Perhaps it is the same internal programming that makes it difficult for me to work at home instead of coming into the office. For whatever reason I find that I am most productive at the office, in a professional environment. I seem to have the tools, space and environment that I find conducive to high productivity work when I am in a business office. I find that I am reasonably productive when I travel to a remote company location and can work from an office while there, as well. It seems to be the transit time where it is difficult for me to work.

It is possible that my productivity on a plane has decreased with the available room to work on a plane. There was a time in the dim, glorious past where a standard coach seat on a plane was a whopping thirty inches wide and there was a staggering thirty two inches of leg room for each seat, in coach no less. Now it seems that there is only twenty seven inches of seat room and twenty eight inches of leg room (if you are lucky). That means we the travelers on average have lost two hundred and four square inches of room on the plane. That is almost one and a half square feet. That is a loss of approximately twenty one percent of the space that we used to get to travel in.

For comparison’s sake, my laptop computer measures eight inches by twelve inches, or is approximately ninety six square inches. On average we have lost more than two laptop computers worth of room on the average airplane seat.

Isn’t it interesting how the cost of travel continues to increase but the space that our airline ticket now purchases has decreased so significantly?

I don’t know how I was going to relate the loss of one and a half square feet of space with my difficulty in being able to work on a plane. I don’t remember being particularly able to work that much better on the old roomier seats. Perhaps it is the now much closer proximity of other people who are also not working on the plane, but who do seem to have over active bladders that is affecting me.

I do however remember being able to sleep more comfortably in the old coach seats.

Regardless, what I find is that I am not as productive when I travel as when I am in the office. I suspect to some extent this is the case for everyone, with the possible exception of my daughter. She seems to be able to conduct her work, which appears to consist of the use of Twitter, Instagram, Facebook and any other number of social media programs, equally well from anywhere. Maybe that is the future of business as well, although I haven’t heard if she can study for her classes as well while on a road trip with her girl friends as she can in her dorm room, but she definitely can “tweet” up a storm.

This brings me in a roundabout way to the topic of if travel actually is efficient. I have had to think about this one for a while. We spend a lot of time and money on travel. Do we actually get our monies worth out of it?

I guess it really depends on a few contributing criteria as to whether business travel can be considered efficient and whether or not we think we are getting our monies worth for the resource investment. Criteria such as who is traveling, who are they meeting, what is the purpose of the meeting, how long is the meeting and how long will it take to get there (and back) should all come into play when looking at travel.

With a decreased productivity associate with travel, spending double digit hours in transit to attend an internal meeting that is scheduled for a couple of hours doesn’t seem efficient. On the other hand as I said earlier, meetings with customers would significantly change the balance of this equation.

I have mentioned travel and meetings with customers several times. That doesn’t mean that all travel associated with customers should be construed as necessary, or efficient. There are only so many dinners, sporting events and outings that you can take a customer to before you should expect some progress. Too many times it seems that we have the tendency to associate meetings with customers as progress. Meetings with customers are activities. As I said earlier, time with a customer should be precious, but progress is actually closing deals with customers and getting contracts.

What this means that in many instances it is difficult to know if the meeting with the customer is going to progress the desired result of a business contract or a product order, or if it will be just another activity.

I guess the bottom line is that travel, even travel to see customers is more expensive from an efficiency and work opportunity lost point of view than just the cost of the airfare and hotel. When you travel you have to put several other functions and opportunities on hold or at least in a lower priority state in order to focus on the travel task at hand. I think it might have been viewed in the past that travel was some sort of break from the grind of work and hence travel might have been something to look forward to.

It’s not.

And as business and the world in general speed up and virtualizes, I am not even sure that it is really an efficient way of conducting much of our business anymore. There is definitely a place for travel, particularly where customer contact is concerned, but I am not so sure about anywhere else.

Maybe I have just traveled enough and don’t want to “get” to travel anymore.

It is somewhat interesting to me that you can both “catch” a disease, and you can “contract” a disease. So what is the difference? The principal difference is that catch suggests a transmittable infection (ex. You can catch a cold or the flu), while contract can refer to a wider variety of diseases, including those that are not contagious (ex. You don’t catch cancer or leukemia, you contract them). I had to look this up. I didn’t say that it was engrossingly interesting to me; I said it was only somewhat interesting to me. In the business world the equivalent would be that you don’t catch a bad deal with a customer or supplier, you contract it.

So many businesses do so many things right in the ongoing process of trying to satisfy customers, so it is truly a shame that when it comes down to consummating the relationship with the customer, in the form of a contract, that they fall short of the good contractual goal. It is almost as if the business entity gets so excited at the prospect of completing the deal that they forget to write a good contract. Contracts at their most basic are very simple: Both entities in a contract want to get something, and in return are prepared to give something. Buyers want to get products or services and in return expect to provide money, and sellers want to get money and in return are prepared to provide products or services.

Beyond this it gets complicated.

Buyers want to get more products and provide less money and sellers want to get more money and provide fewer products. Herein lies the rub. How do you make sure everyone delivers what they should and pays what they should? You create a good contract.

There are many benefits and detriments associated with the advent of contracts. The greatest detriment that I can think of is that contracts gave rise to a new species of life, commonly referred to as “lawyers”. To bring a little circular logic into play here, it is good to remember that it is very difficult to “catch” a lawyer (at anything). Invariably you must “contract” them, but if you wash your hands thoroughly afterwards, while you probably will not reduce any of your risks, you will definitely feel cleaner.

I know it sounds a little trite but contracts are definitely a necessity in business. There must be some way for both parties to enforce the agreement that they are pursuing. Promises are good, and I am sure that everyone involved is both reasonable and honorable, but it still needs to be put in writing. Understand that agreements and requirements of any type can span multiple years. During that period it is not uncommon for the people who were party to the initial deal and who may understand the reasons for what was done, to move on to other roles. At the very least there needs to be a historical record of the agreement in the form of a contract so that those who follow on both sides of the agreement have something to refer to when questions arise.

This brings us to “Contracting Disease”. This is a malady that affects many businesses and is very prevalent particularly around business deadlines or at the end of any measurement period. A measurement period is usually the end of a month, quarter or year. It is during these deadlines or end of the measurement periods where usually reasonably sane organizations will succumb to one of any number of pressures and sign what is known as a bad contract.

A bad contract is the result where for whatever reason one of the parties to the contract either temporarily or permanently seemed to lose their mind and the other party to the contract lets them.

Contracts are normally designed to balance each party’s risks against the specific values that they are to receive. The standard risks are normally associated with how much of a good or service is to be supplied, how long it will be supplied, how much is to be paid for it and when it is to be paid for. There are normally many other items to be considered in a contract, but these are the primary ones, and usually any others somehow relate to these.

Contracting Disease can strike buyers at almost any time but usually occurs when the buyer either puts themselves in a position where very few if any suppliers can fulfill their product specification requests, or they find themselves in a position where an external factor has occurred and they must obtain a good or service at almost any cost in order to remain functioning. The US government is a perfect example of the self inflicted product specification contract. Government contract specifications and processes are usually incredibly complex and are pursued by only a limited number of specialized businesses. This is the type of process that results in contracts for five hundred dollar hammers and twenty five hundred dollar toilet seats. This is not an example of “you get what you pay for”. This is an example of “you pay, and you pay a lot, for what you needlessly over specify”.

A good example of the buyer’s need situation can be seen in the oil embargo of the 1970’s here in the US. OPEC decided that the US was not their friend, needed to be taught a lesson and as a result they were not going to ship any more oil to the US. This resulted in a reduced supply of gasoline at the pumps for all consumers and anyone else who drove a car. Consumers needed gasoline so that they could continue to drive their gas-guzzling cars. Enterprising gas stations recognized this opportunity and started raising their prices for gasoline far beyond any rational level based on the newly limited supply. In short they took advantage of the situation and raised the price of gasoline to unheard of exorbitant levels, but back then they would at least clean your windshield when you filled up so it wasn’t quite so bad.

Gas stations raised their price for gasoline to far more than ONE DOLLAR per gallon during the OPEC oil embargo. Can you image the nerve of those places charging more than a dollar for gas?

This was seen as price gouging and federal laws were quickly enacted to stop the practice. However, at the time, gas buyers who wanted to drive their cars had no choice but to agree the gas station’s contract and to pay the exorbitant price if they wanted any gas.

Contracting Disease can strike sellers in a myriad of ways, but it usually boils down to the fact that the buyer for whatever reason wants the buyer’s money and will agree to almost anything the buyers’ want in order to get the money. As I noted, Contracting Disease in sellers appears to be primarily a seasonal related malady. It seems to strike at the end of each quarter and especially hard at the end of the year. It is no coincidence that these periods coincide with the end of the various financial reporting periods. It is at these times that some sellers’ drives for incremental revenue (and contracts) can reach a fevered pitch.

Unfortunately (or fortunately depending on which side of the contract that you are on) there are no laws to protect sellers from themselves when it comes to selling their goods or services. This has to be one of the ultimate self regulating environments; the environment where the long term costs of signing a contract outweighs the short term inflows of money. When this self regulation does not occur, Contracting Disease sets in. In many markets it appears that buyers have recognized the periodic nature of sellers’ Contracting Disease and purposely try to wait until these high risk periods to negotiate and sign contracts.

When discussing Contracting Disease it is best to remember that buyers are usually protected in one form or another when it comes to the purchase (contract) of necessities and staples required for ongoing survival. Collusive or predatory practices by vendors are illegal. However Contracting Disease that results in a contract with incremental self inflicted risks and expenses associated with either the purchase of, or the sale of goods and services has no regulatory limit.

In
stead of caveat emptor (“buyer beware”) or caveat vendor (“Seller beware”), it should more accurately be Caveat Contractor.

Sun Tzu was a Chinese military general in approximately the 5th century, B.C. He is renowned for never losing a battle. He wrote a treatise on conducting campaigns called “The Art of War”. It is an excellent book and I highly recommend it.

Most people apply what Sun Tzu wrote to the on going battles with competitors, and this may in fact be a very good application of some of his axioms. Most people apply Sun Tzu’s writings from the point of “winning” that battle, when in fact he wrote about “not losing” the battle. He was renowned for never losing a battle. He didn’t win them all. Many times he chose not to engage the competition because he felt he did not have a sufficient enough advantage to assure his victory.

Sun Tzu wrote;

“If you do not know your own capabilities, and you don’t not know your adversaries capabilities, you can not win.

If you do know your own capabilities, and you don’t not know your adversaries capabilities, you can lose half the time.

If you do not know your own capabilities, and you do know your adversaries capabilities, you can lose half the time.

If you do know your own capabilities, and you do know your adversaries capabilities, you can not lose.”

This is very interesting stuff, and I have written about it before. The question I would like to address here is how this relates to Customers, not competition.

Once the engagement with the competition has been won, a new engagement begins with the customer. Once the customer has been won, they are not guaranteed to be your customer for life. The idea here is to follow the idea of “not losing” the customer. If you know your own capabilities (and you probably do because you won against the competition) you must now learn the customer’s capabilities in order to be assured that “you can not lose”.

Over time (either short or long term) your corporate / business / group focus can change. These changes may not be perceived as congruent with the directions and desires of your customer. Over time the people and requirements of your customer will also change. These changes may change their perception of the value of having the current business relationship with you. The key is to be aware of and adapt to these changes in both your and the customers “capabilities”.

Research shows that it is 5 times easier to sell a new product or capability to an existing customer than it is to sell to a new customer. Every customer that is lost out of your customer base takes 5 times the effort to replace. What this shows is that winning customers is great. Not losing the customers you have is 5 times better.

Once the competitors are beaten and the customer is engaged, it stands to reason that you can modify Sun Tzu a little to read;

“If you do know your own capabilities, and you do know your Customer’s capabilities, you can not lose.”

It used to be that if you made the best products, you had a distinct competitive advantage. However, today it appears that things have changed. If you are not making the best products, you are not at a competitive disadvantage, you are out of business.

Off-shoring, and its new euphemism “Right-Shoring”, have reduced the costs of everyone’s products. Moore’s Law (the doubling of technology’s capabilities approximately every 18 months) is well understood, and in some quarters is thought to be close to having run its course. With so many open standards, products are no longer comparable, they are virtually interchangeable.

As China emerges on the technology scene as an economic super power, it is using its competitive labor advantage (most technology based companies have their products manufactured in China by various Contract Manufacturers), and its technical parity to try and make every customer’s buying decision a price based one. In trying to make every buying decision solely a priced based one, it is in effect “commoditizing” the equipment.

If there is no ability to differentiate equipment, other than price, what can be done? The obvious choice is to start focusing on the non-equipment differentiators: the level of relationship and trust between the customer and vendor, ease of equipment installation, ease of product maintenance, warranty length and breadth of coverage, etc. In short Service.

As products become more technically capable, they can have a tendency to become more complex to operate. Their installation and implementation have become more specialized. Their maintenance and the ability to trouble shoot their problems require much more training and specialized support.

Customers do not seem to buy technology for technology’s sake. They are buying a “use” or application to fulfill their specific need. The ability to simplify and reduce the customer’s perceived risk associated with the implementation and operation of their equipment in the delivery of its functional usage can be significant equipment decision differentiators.

With it becoming so difficult to differentiate commoditized equipment, it will pay to try and differentiate the ease and simplicity of product usage, the depth and breadth of support, and the comprehensive level of service that will accompany the equipment. When the competition is trying to make the customer’s buying decision a price based one, you will need to try and make it a service based one to change the decision criteria back in your favor.

We have all seen it, and probably even done it at one time or another. A customer wants something. It is a logical request. They are a good customer. We really want to make them happy. The problem is that we are just not able to provide them what they want. It is now somebody’s responsibility to tell them.

It may be too expensive to develop the capability or to do. You may not have the resources available. The product or service may just not be technically capable of delivering what has been requested. It may be so far outside the contractual arrangements that you just can’t do it.

It is bad news.

Our first response is to try and soften the news. We naturally look for some way to get around the issue. We want to leave some feeling that there may be some way around the problem or a potential solution in the future. Don’t defer it, avoid it, or assign it to someone else.

This is only digging the hole deeper.

Business is about setting expectations and then meeting them. If you can not meet a customer’s request, you need to deliver that position and set the expectation that the request will not be met. It is business. People understand that they will not always be able to get everything they want. If positioned properly and honestly, it will be known that it is your desire and position to provide the best service and capabilities available, but that sometimes you are not able to fulfill every customer request.

In the future, if a solution to the customer’s request is found or developed, they will be pleased as their expectations (of no solution) will be exceeded. Whereas if you have positioned for a potential review or solution at sometime in the future to avoid delivering bad news, you have delayed meeting their expectations and created frustration. Customers understand a “yes” or a “no” answer, but a “maybe” will almost always frustrate them.

Customers associate value with items that they pay for. If they don’t have to pay for it, then they assume it has no value. I think that this is another of the immutable laws of sales.

We have all heard of and potentially even tried to use the old “try and buy” closing technique. This is when you provide the customer the product for free, and at the end of some period of time they should be so enthusiastic about the product that they can’t help but pay you for it. While this may work for smaller ticket items, I have found that its success rapidly diminishes as the cost and sophistication of the product increases.

The view here is that if the customer believes that the product is free, for whatever period of time, then it has no value at least for that specific period. If the customer has no commitment to the trial process (in the form of committed money for the cost of the product) then there is no commitment from them to actually using the product to fairly ascertain its value. The key point here is that if the seller puts no value on their own product, why should the customer put any value on it.

The solution is to get the customer to put “some skin in the game”. They have to commit something of value – money – to the “trial”. Their time is nice but it is not good enough. The approach should be for them to buy the product for a period of time and if it does not perform to certain specifications, then it can be returned with a minimal restocking fee. Again a restocking fee, or a de-installation fee, etc, is important. As much as we would all like it (customers included) nothing is for free and the customer must understand that there is at least a small risk if the trial is a failure.

By implementing a “buy and try” sales process you can reduce the customers perceived risk and exposure associated with the product purchase while making sure they are committed to its use. It is in effect providing them with a fully paid grace period. If the product is sound, the service good and the relationship strong, it should also provide an effective way to close the deal.